Though an interspousal transfer deed is often intended to avoid estate taxes, this is not always successful. A poorly organized transfer can sometimes be subject to taxation. Worse, these taxes are often a surprise to the spouse who received the transferred property, making for a hefty tax bill that one is completely unprepared for.
If you are considering an interspousal transfer deed that surrenders your ownership of a property, be certain you trust your spouse. If you have signed such a deed and later get divorced, the property is no longer jointly held, and you have no rights to it or to proceeds from its sale. This remains true even if you contributed to house payments or property taxes after signing over the deed.
If your family is counting on your home to be a portion of the estate they will inherit, it can cause hurt feelings if they find out that it is actually the property of your spouse. This is especially true of a later second marriage, where children might feel some right of ownership to a house you originally bought with their other parent.